Behavioral Finance Trumped

Richard Thaler, a professor of behavioral science and economics at the University of Chicago Booth School of Business, is widely considered one of behavioral finance’s founding fathers (along with Daniel Kahneman and Amos Tversky). His excellent new book, “Misbehaving,” is partly a history of how the field of behavioral finance originated and developed, despite hurdles created by the financial establishment.

Don’t Dismiss EMH
Thaler also discusses some of the more common investment mistakes arising from behavioral biases, as well as a behavioral explanation for the equity risk premium puzzle. Today however, we’ll take on Thaler’s thoughts in “Misbehaving” regarding two key issues related to the efficient markets hypothesis (EMH).

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